CRA Loan - Not Just for First Time Buyers!

No Down Payment and Affordable Housing Loans in Houston for first time buyers and previous homeowners.

By Mike Brombacher - Houston Inner Loop Realtor

Did you miss out on the recent Wells Fargo NeighborhoodLIFT grant for first time home buyers in Houston?  Is your income too high for other first-time home buyer or affordable home loans and grants? Looking for a great mortgage loan to buy a home in the loop? The CRA loan just might be the right option for you...

CRA Loan Features and Incentives

• Up to 100% Financing (Yes, that’s 0% down payment)
• Loan amounts up to $453,100
• Competitive fixed rate (the CRA loan rate in 2018 was well UNDER 4%)
• NO Origination Fee (the origination fee is typically 1% of the loan amount)
• NO mortgage insurance requirement (No PMI)--even with 0% down!
• Reduced Closing Costs

Houston CRA Loan Program Requirements

There are two methods to qualify for the CRA loan:

• Property must be located in a low- or moderate-income (LMI) designated census tract in a Cadence Bank Assessment Area
• The borrower(s) must make less than 80% of the median income of the Assessment Area

Either you must buy in a LMI area (NO income requirements), or buy a non-LMI area home but make less than 80% of the median income of the Assessment area.

Where are the LMI areas in Houston?

Popular inner loop LMI neighborhoods include:

EaDo, Eastwood, East End, portions of the Heights including Brooke Smith Heights, Near Northside, Third Ward, Riverside Terrace, University area, and more.

How do I know if a home is in a LMI area?

You can check the LMI census map here. Type in the address and zip code, click Search, then click the Census Demographic Data button on the left. If the Tract Income Level column says Low or Moderate then the home is eligible.

Houston CRA Lenders

• Cadence Bank
• Cornerstone
• Amegy

Why is the CRA loan so great?

Like Mattress Mac would say, “Saves you money!” Typically loans charge PMI or private mortgage insurance if the buyer is putting less than 20% down payment on their new home. The CRA loan allows you to buy a home with 0% down payment and there is NO PMI. Instead of putting down 3.5% on FHA loan or 5% on a conventional loan you can save the down payment money to buy new furniture, appliances, or remodel your new home.

Also, the interest rate on a CRA loan is lower than most conventional loans. In fact, in late 2018, the CRA interest rate was only 3.875% and most conventional loan rates were around 5% or higher.

Do I have to be a first-time home buyer?

No, as long as you don’t own another home when you close on your new home using a CRA loan.

What is the CRA? Why does it even exist?

CRA or the Community Reinvestment Act, is a US law pushing banks to meet credit needs in communities where they take deposits and have customers. There is a heavy emphasis on helping meet credit needs of low and moderate income neighborhoods. Banks are incentivized to focus on CRA performance as these metrics are used by regulators when banks apply for new branches or buying another bank (M&A).

Is there anything at all I can help you with? Looking for a realtor that will save you money?

Text/call or email me at 832-656-1932 or mike@houston-neighborhoods.com